From 1st April 2025, significant changes to Stamp Duty Land Tax (SDLT) in England and Northern Ireland will come into effect, impacting homebuyers, landlords, and property investors. These changes will see the return of lower tax-free thresholds and increased rates for those purchasing additional properties. Understanding these updates is crucial for anyone considering buying property, especially landlords and investors who will be subject to higher SDLT rates.
How Stamp Duty Works
SDLT is calculated based on various factors, including whether the buyer is a UK or non-UK resident, whether they are purchasing as an individual or a business, and whether they are a first-time buyer, replacing a primary residence, or purchasing an additional property. The amount payable varies depending on these circumstances, and from April 2025, the tax burden will increase for many buyer categories.
Changes for Residential Buyers
Currently, homebuyers pay 0% SDLT on properties valued up to £250,000. From April 2025, this threshold will change to £125,000, meaning tax will be payable on any amount above this level. For example, if you purchase a property for £225,000, you will now pay 2% SDLT on the amount over £125,000, resulting in a tax bill of £2,000.
For first-time buyers, the nil-rate threshold will be reduced from £425,000 to £300,000. While first-time buyers currently pay 5% tax on purchases between £425,001 and £625,000, from April, this range will shrink, applying only to properties valued between £300,001 and £500,000. If you are a first-time buyer purchasing a home worth £425,000, this means an SDLT bill of £6,250 – a cost that would be waived if the sale was completed before April.
Impact on Landlords and Investors
The most significant changes apply to those purchasing second homes, buy-to-let properties, or investment properties through a company. The surcharge on additional properties will rise from 3% to 5%, and tax bands will shift, meaning investors will face increased costs across the board.
Currently, buyers of second homes pay 5% SDLT on properties up to £250,000, but from April, this will apply only to properties up to £125,000. For properties valued between £125,001 and £250,000, the rate will increase to 7%. For example, an investor purchasing a second property for £250,000 will pay £17,500 in SDLT from April, compared to £12,500 today – an additional cost of £5,000.
For company purchases of properties over £500,000, SDLT will increase from 15% to 17%, further discouraging corporate acquisitions of residential property.
The Policy Behind the Changes
The government aims to make homeownership more accessible by discouraging the purchase of second homes and investment properties, thereby freeing up housing stock for primary residential use. While this could create opportunities for first-time buyers, it also presents challenges for landlords looking to grow their portfolios.
How Northern Group Can Help
At Northern Group, we work closely with landlords and investors to navigate market changes, ensuring they maximise returns despite evolving regulations. Our expert property management services help landlords optimise rental incomes, reduce void periods, and benefit from high-quality tenants. By leveraging our in-depth knowledge of Manchester’s property market, we support landlords in making informed decisions and maximising returns on investments, even as SDLT changes take effect.
Get in touch with our team to explore your options and ensure you are making the most of your property investments in 2025 and beyond.
📧 0161 974 3232
📞 enquiries@northerngroup.co.uk
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